The directed economy, as we have it today concerning agriculture, commerce and industry, is not only the expression of the present State principles, but at the same time also the economy of the country's defense." it was deliberately designed and executed to provide the necessary instrument of the Nazi conspirators' plans for aggressive war. to the American Ambassador in Berlin that the Hitler Party was absolutely committed to war, and the people too were ready and willing.
That quotation is found in Ambassador Dodd's diary and is document bearing our number 2832-PS, United States Exhibit number 29; in particular, on page 176 of Ambassador Dodd's diary. for the control of imports and exports in the interest of rearmament. A year later he was appointed plenipotentiary for the War Economy by the top secret decree referred to a few minutes ago. attended by the defendant Schacht and others -- that Hitler had issued instructions to the Reich War Minister on the basis that the show-down with Russia was inevitable, and added that "all measures have to be taken just as if we were actually in the stage of imminent danger of war". Before I discuss the quotation I might indicate that this document is also marked a secret Reich matter in the minutes of the Cabinet meeting of the 4th of September, 1936, at 12 o'clock noon. It tells who were present:
The defendant Goering, von Blomberg, the defendant Schacht, and others.
found the quotation by the defendant Goering. It starts from the basic thought that: "The show-down with Russia is inevitable. What Russia has done in the field of reconstruction we too can do." defendant Goering states: "All measures have to be taken just as if we were actually in the stage of imminent danger of war." with the mission of making Germany self-sufficient for war in four years. I refer back, at this point, to document EC-408, and I particularly refer your Honors to the third paragraph, again, of that document, where the statement is made as regards the war economy: Minister-President, Generaloberst Goering sees it as his task, within four years, to preparing Germany for war. They received, however, the enthusiastic cooperation of the German industrialists. The role played by industrialists in converting Germany to a war economy is an important one, and I turn briefly to that aspect of the economic picture. the leading industrialists of Germany, and the defendant Schacht, attended a meeting in Berlin on the 20th day of February, 1933. This was shortly before the election of March 5, 1933, in Germany. At this meeting Hitler announced the conspirators' aim to seize totalitarian control over Germany, to destroy the parliamentary system, to crush all opposition by force, and to resore the power of the Wehrmacht.
were Gustav Krupp, head of the huge munitions firm, Alfried Krupp, A.G.; four leading officials of the I.G. Farben Works, one of the world's largest chemical concerns; and, I repeat, also present was the defendant Schacht. Albert Vogler was also there, the head of the huge steel trusts, the United Steel Works of Germany, and there were other leading industrialists there.
In support of the assertion with respect to that meeting at that time and in that place, I refer your Honors to the document bearing the number EC-439, it being an affidavit of George von Schnitzler, which reads as follows:
"I, George von Schnitzler, a member of the Vorstand of I. G. Farben, make the following deposition under oath:
"At the end of February 1933, four members of the Vorstand of I. G. Farben, including Dr. Bosch, the head of the Vorstand, and myself were asked by the office of the President of the Reichstag to attend a meeting in his house, the purpose of which was not given. I do not remember the two other colleagues of mine who were also invited. I believe the invitation reached me during one of my business trips to Berlin. I went to the meeting which was attended by about 20 persons, who I believe were mostly leading industrialists from the Ruhr.
"Among those present I remember:
"Dr. Schacht, who at that time was not yet head of the Reichsbank again and not yet Minister of Economics.
"Krupp von Bohlen, who in the beginning of 1933 presided the Reichsverband der Deutschen Industrie, which later on was changed in the semi-official organization 'Reichsgruppe Industrie.'
"Dr. Albert Vogler, the leading man of the Vereinigte Stahlwerke.
"Von Lowenfeld from an industrial work in Essen.
"Dr. STein, head of the Geworkschaft Auguste Victoria, a mine which belongs to the I. G. Dr. Stein was an active member of the Deutsche Volkspartei.
"I remember that Dr. Schacht acted as a kind of host.
"While I had expected the appearance of Goering, Hitler entered the room, shook hands with everybody and took a seat at the top of the table. In a long speech he talked mainly about the danger of communism over which he pretended that he just had won a decisive victory.
"He then talked about the Bundnis - alliance - into which his party and the Deutsch Nationale Volkspartei had entered. This latter party, in the meantime, had been reorganized by Herr von Papen. At the end he came to the point which seemed to me the purpose of the meeting. Hitler stressed the importance that the two aforementioned parties should gain the majority in the coming Reichstag election. Krupp von Bohlen thanked Hitler for his speech. After Hitler had left the room, Dr. Schacht proposed to the meeting the raising of an election fund of, as far as I remember, RM 3,000,000. The fund should be distributed between the two 'allies' according to their relative strength at the time being. Dr. Stein suggested that the Deutsch Volkspartei should be included" -
THE PRESIDENT (interposing): Mr. Dodd, it seems to me that really all that document shows is that there was a meeting at which Mr. Schacht was present, and at which it was determined to subscribe an election fund in 1933.
MR. DODD: That is quite so, your Honor. I will not labor it by reading all of it. There were some other references, but not of major importance, in the last paragraph, to a division of the election fund. I just call your Honors' attention to it in passing.
I should like, at this point, to call your Honors' attention to the document bearing the number D-203, which is a three-page document.
THE PRESIDENT: What is the number?
MR. DODD: D-203. I wish to read one excerpt from it very briefly. It is the speech delivered to the industrialists by Hitler, and I refer particularly to the second paragraph of that document:
"Private enterprise cannot be maintained in the age of democracy;"-
THE PRESIDENT (interposing): What is the date of that?
MR. DODD: It is the speech made at the meeting on the 20th of February, 1933, at Berlin.
THE PRESIDENT: Yes.
MR. DODD: "Private enterprise cannot be maintained in the age of democracy; it is conceivable only if the people have a sound idea of authority and personality." excerpt from the first paragraph on page 2, about 13 sentences down, beginning with the words: "I recognized even while in the hospital that one had to search for new ideas conducive to reconstruction. I found them in Nationalism, in the value of strength and power of individual personality". tence of that same paragraph, Hitler said:
"If one rejects pacifism, one must put a new idea in its place immediately. Everything must be pushed aside, must be replaced by something better."
Then, in the third paragraph, the last sentence: "We must not forget that all the benefits of culture must be introduced more or less with an iron fist, just as once upon a time the farmers were forced to plant potatoes." end of it: "With the very same courage with which we go to work to make up for what had been sinned during the last 14 years, we have withstood all attempts to move us off the right way." words: "Now we stand before the last election. Regardless of the outcome there will be no retreat, even if the coming election does not bring about a decision."
THE PRESIDENT: Why did you not read the last line on page 2: "While still gaining power, one should not start the struggle against the opponent"?
MR. DODD: Beginning with the words "while still gaining power"?
THE PRESIDENT: The sentence before, "We must first gain complete power if we want to crush the other side completely. While still gaining power, one should not start the struggle against the opponent. Only when one knows that one has reached the pinnacle of power, that there is no further possible development, shall one strike."
MR. DODD: I was going to refer to that, if your Honor please, in a minute. However, I think it is quite proper to have it inserted here. is now the accustomed recess time, as I understand it, and it is a rather lengthy paragraph -
THE PRESIDENT (interposing): Yes, we will adjourn until 2 o'clock.
(Whereupon at 1230 hours the Tribunal adjourned, to reconvene at 1400 hours of the same date).
Tribunal, in the matter of: The United States of
MR. DODD: If Your Honor pleases, if I may go back for just a very little bit to take up the train of thought where I left off at the noon recess. D-203, and I had referred particularly to the third page of that document, and even more particularly to the second paragraph on that page; and I wish to read from a sentence approximately 8 or 10 lines down in that second paragraph, which reads as follows:
"The question of restoration of the Wehrmacht will not gained internal strength through internal peace."
document, and to the last paragraph and the last sentence, which refers to the defendant Goering, who was present at that same meeting to which this document refers, the meeting of February 20, 1933, in Berlin. Goering said:
"That the sacrifices asked for surely would be so much hundred years."
and for the information of the court, in the document book, bearing the number D-204, Gustav Krupp described this meeting briefly, and in the memorandum wrote that he had expressed to Hitler the gratitude of the 25 industrialists present at the meeting on February 20, 1933.
which we do not deem to be particularly pertinent to the allegations of the indictment with which we are now concerned. together with the report of the speech of Hitler, were found by the British and the United States Armies in the personal files of the defendant Krupp. I am pursuing here is a little tedious, because I am trying to refer specifically to the documents, and particularly to the excerpts referred to in my remarks, and therefore this presentation differs very considerably from that which has gone before. I trust, however, that you will bear with me, because this part of the case requires some rather careful and detailed explanations. himself in power, Gustav Krupp, as Chairman of the Reich Association of German Industry, which, was the largest association of German industrialists, submitted to Hitler the plan of that association for the reorganization of German industry, and in connection therewith, undertook to bring the Association into line with the aims of the conspirators, and to make it an effective instrument for the execution of their policies. the plan of reorganization which he submitted on behalf of the Association of Industrialists, was characterized by the desire to coordinate economic measures and political necessity, adopting the Fuehrer conception of the new German state.
A copy of that letter of transmittal is set out in the document book under the number D-157.
In the plan of reorganization itself, Krupp stated:
"The turn of political events is in line with the have cherished for a long time.
In reorganizing the Reich Government."
members of the Reich Association of German Industry for introducing the leadership principle into industry, were subsequently adopted.
I, 1194, Sections 11, 12 and 16. each group of industry was required to have a leader who was to serve without compensation. The leaders were to be appointed and could be removed at the discretion of the Minister of Economics. The charter of each group was to be created by the leader, who was obligated to lead his group in accordance with the principles of the National Socialist State. principle into the organizations of business permitted the centralization of authority, and guaranteed the efficient execution of orders, which the government issued to business, in the interest of a promotion of a war economy.. war program is very vividly described in a speech prepared by Gustav Krupp in January of 1944, for delivery at the University of Berlin; and I must again respectfully refer Your Honors to the document in your book bearing the identification number D-317. document, but I should like to quote from it without wrenching any of the material from its true context. first large paragraph on the first page:
"War material is life-saving for one's own people, and whoever works and performs in those spheres can be proud of it.
Here, enterprise as a whole, finds its highest justification of existence.
This justifi disarmed";and further on:
"It is the one great merit of the entire German war economy that it could not be brought to light for obvious reasons.
Through years of hour without loss of time or experience."
particularly on the first page:
"Only through the secret activity of German enterprise, together new tasks arrived at, restoring Germany's military power.
Only up by the Fuehrer's Four-Year Plan for German enterprise, be mastered.
endent and strong - in short, to make it war-worthy," Quoting even further from the same speech:
"I think I may state here that the German enterprises followed the new became his faithful followers.
How else could the tasks between 1933 and 1939, and especially those after 1939, have been overcome?"
immediately upon the seizure of power by the Nazi conspirators. On April 4, 1933, the Reich Cabinet passed a resolution establishing a Reich Defense Council. The function of this Council was secretly to mobilize for war; and at the second meeting of the Working Committee of the Councillors for Reich Defense, which was, by the way, the predecessor of the Reich Defense Council, at that second meeting which was held on May 22nd, 1933, the Chairman was the defendant Keitel, then Colonel Keitel; and he stated that the Reich Defense Council would immediately undertake to prepare for war emergency. He stressed the urgency of the task of organizing a war economy, and announced that the Council stood ready to brush aside all of their obstacles. Fully aware of the fact that their action was in flagrant violation of the Treaty of Versailles, the defendant Keitel emphasized the extreme importance of absolute secrecy when he said, and I quote from the document bearing the number EC-177, on page 5 of that document.
Colonel Keitel is speaking, and he said:
"No document ought to be lost, since otherwise it may fall into the hands of the enemies' intelligence, service.
Orally transmitted, matters are not provable; they can be denied by us in Geneva."
German economy to the forging of a war machine is even further shown by the secret minutes of the second meeting of the Working Committee of the so-called Reich Defense Council, held on the 7th February, 1934, as shown in the document bearing the number EC-404, marked "Secret Command Matter", and dated 7th February 1934. At this meeting, Lieutenant-General Beck pointed out that:
"The actual state of preparation is the purpose of this session". appears that besides Lieutenant-General Beck, the defendant Jodl was present, then Lt. Colonel Jodl. There wan a Captain Schmundt; and there was a Colonel Guderian there; and there was a Major-General Von Reichenau; there was a Major Warlimont; and these are names that Your Honors will hear more of in the course of the presentation of this case.
pointed out that the financial aspects of the war economy would be regulated by the Reich Finance Ministry and the Reichsbank, which was headed by the defendant Schacht.
THE PRESIDENT: Are you passing from EC-404?
MR. DODD: I am, Your Honor.
THE PRESIDENT: Very well, go on.
MR. DODD (continuing): As was stated earlier in this morning's discussion, the defendant Schacht was secretly appointed PlenipotentiaryGeneral of the War Economy, and he had the express function of placing all economic forces of the nation in the services of the Nazi war machine. ceived this secret appointment, he was in effect, given charge of the entire war economy. In case of war, he was to be virtual economic dictator of Germany. His task was to place all economic forces into the service for the conduct of the war and to secure economically the life of the German people. The Ministers of Economics, of Food, Agriculture, Labor, Forestry, as well as all Reich agencies directly tinder the Fuehrer, were subordinated to him. He was to be responsible for the financing as well as for the conduct of the war; and he was even authorized to issue ordinances within his Sphere of responsibility, even if these deviated from the existing laws.
The rearmament of Germany proceeded at an amazingly rapid pace. By the summer of 1935, the Nazi conspirators were emboldened to make plans for the reoccupation of the Rhineland; and at the tenth meeting of this same Working Committee of the Council, the question of measures to be taken in connection with the proposed reoccupation of the Rhineland were discussed.
the Rhineland required special treatment because of the assurances given by Hitler to the French that no military action was being undertaken in the de-militarized zone. Among the matters requiring special treatment was the preparation of economic mobilization, a task specifically entrusted to the defendant Schacht, as secret Plenipotentiary for the War Economy.
THE PRESIDENT: Are you reading from this document?
MR. DODD: I am quoting ,in part from it, Your Honor, and it is upon this document that I base my statements. I dislike annoying the court with constant references to these documents, but I thought it would be the best way to proceed.
THE PRESIDENT: If you tell us exactly where it is in the document we can find it in the document.
MR. DODD: It is on page 4, if Your Honor please.
THE PRESIDENT: Yes, go on.
MR. DODD: On page 4, the middle of the page, the fifth paragraph, the first sentence - "the de-militarized zone requires special treatment".
THE PRESIDENT: Yes.
MR. DODD: And on page 3, "J", under "The Preparations", "preparation of economic mobilization". On page 4, the last paragraph just before the setting-out of the "A", "B", "C" and "D".
THE PRESIDENT: I think you ought to read on page 4, the last paragraph 1 -- "Since political entanglements..."
MR. DODD: That was the one I had proceeded to read.
THE PRESIDENT: I thought you had gone on to page 5.
MR. DODD: "Since political enganglements abroad must be avoided at present under all circumstances, only those preparatory measures that are urgently necessary may be carried out. The existence of such preparations, or the intention of them must be kept in strictest secrecy in the zone itself as well as in the rest of the Reich". a few minutes ago, as the last one in the list, the preparation for economic mobilization.
measures, and for the financial preparation for evacuation measures, and so forth. We shall pass now from that document to the rapid success of the German re-armament is attributable primarily to the work of the defendant SCHACHT. In the fall of 1934, the Nazi conspirators announced the so-called "New Plan", aiming at the control of imports and experts in order to obtain the raw materials which were needed for armaments and the foreign currency which was required to sustain the armament program. The new plan was the creation of defendant SCHACHT. Under the plan, defendant SCHACHT controlled imports by extending the system of Supervisory Boards for import control, which was previously limited to the main groups of raw materials, and all goods imported into Germany, where those raw materials are -- semimanufactured goods, or finished products. The requirement of licenses for imports enabled the Nazi conspirators to restrict imports to those commodities which served their war aims.
Subsequently, in February, 1935 the "Devisen" Law was passed which can be found (Reichsgesetsblatt 1935, I, 105). Under it, all transactions involving foreign exchange were subject to the approval of Devisenstellen (Foreign Exchange Control Offices). By thus controlling the disposition of foreign exchange, the conspirators were able to manipulate foreign trade so as to serve their needs and desires. geared to war under the guidance of the Nazi conspirators, particularly defendant SCHACHT. In a study of the economic mobilization for war as of 30 September 1934, it was stated that steps had already been taken to build up stock piles, to construct new facilities for the production of scarce goods, to redeploy industry to secure areas and to control fiscal and trade policies. References were made to the fact that the task of stock piling had been hampered by the requirement of secrecy and camouflage. Reserves of automobile fuels and stocks of coal were accumulated and the production of synthetic oil was accelerated. Civilian supply was purposely organized so that most plants would be working for the German Armed Forces.
Studies were made of the possibility of barter trade with "supposedly" neutral countries in case of war. problem for the conspirators. In 1934 and 1935, the German economy could by no possibility have raised funds for their extensive rearmament program through taxes and public loans. From the outset, the armament program involved "the engagement of the last reserves". tain this program, the Nazi conspirators were exceedingly anxious, in the early stages, to conceal the extent of their feverish armament activities. program, defendant Schacht proposed the use of "mefo" bills, spelled M-E-F-O. One of the primary advantages of this method was the fact that figures indicating the extent of rearmament that would have become public through the use of other methods could be kept secret through the use of "mefo" bills. Mefo bills were used exclusively for armament financing.
Transactions in "mefo" bills worked as follows: "Mefo bills were drawn by armament contractors and accepted by a limited liability company. In other words, of which spelling MEFO is from whence the transaction takes its name, called the Metallurgische Forschungsgesellschaft, m.b.h. (MEFO). This company had a nominal capital of one million Reichsmarks and was therefore merely a dummy organization. The bills were received by all German banks for possible rediscounting with the Reichsbank. The bills were guaranteed by the Reich. Their secrecy was assured by the fact that they appeared neither in the published statements of the Reichsbank nor in the budget figures.
The "mefo" bill system continued to be used until April 1, 1938. To that date, 12 Billion Reichsmarks of "mefo" bills for the financing of rearmament had been issued. Since it was no longer deemed necessary to conceal the vast progress of German rearmament, "mefo" financing was discontinued at that time.
finance the Secret Armament Program was the funds of political opponents of the Nazi regime, and marks of foreigners on deposit in the Reichsbank. As Schacht boasted, "Our armaments are also financed partly with the credits of our political opponents." dated 3 May 1935, and it bears the number in the document of Book 1168-PS, and the specific sentence I found in the second paragraph is:
The outstanding "mafo" bills at all times represented a threat to the stability of the currency because they could be tendered to the Reichsbank for discount, in which case the currency circulation would automatically have to be increased. Thus, there was an everpresent threat of inflation. But Schacht nevertheless continued on his course, because "he stands with unswerving loyalty to the Fuhrer, because he fully recognizes the basic idea of National Socialism and because at the end, the disturbances, compared to the great task can be considered irrevelant.
High ranking military officers paid tribute to defendant Schacht's contrivances on behalf of the Nazi war machine. In an article written for the "Military Weekly Gazette" in January 1937, it was said:
"The German Defense Force commemorates Dr. Schacht directions from the Fuhrer and Reich Chancellor.
The Defense Force owes it to Schacht's skill and great present strength from an army of 100,000 men."
re-doubled their efforts to prepare Germany for a major war. The Four-Year Plan was proclaimed by Hitler in his address at the Nurnberg Party Convention on 9 September, 1936, and it was given a statutory foundation by the Decree concerning the Execution of the Four-Year Plan dated 18 October, 1936, which I found in Reichsgesetzblatt 1936, I, 887.
By this decree defendant Goering was put in charge of the plan. He was authorized to enact any legal and administrative measures deemed necessary by him for the accomplishment of his task, and to issue orders and instructions to all government agencies, including the highest Reich authorities. complete self-sufficiency in essential raw materials, notably motor fuel, rubber, textile fiber, and non-ferrous metals, and to intensify preparations for war. The development of synthetic products was greatly accelerated despite their high costs. conspirators required foreign exchange to finance propaganda and espionage activities abroad. Thus, in a speech on November 1, 1937, before the Wehrmachtakademie, General Thomas stated:
"If you consider that one will need during the war Foreign Exchange will be needed."
by virtue of the espionage and propaganda services rendered free of charge to the Nazi State by leading German industrial concerns. 12 October 1935. It was found in the files of the Krupp Company by representatives of United States and British Isles. I shall not read all of it unless Your Honor requires it, but I'll start at the beginning by way of establishing its purposes and information contained therein. It is entitled "Memorandum". There is the subheading: Concerns: - distribution official propaganda literature abroad with help of our foreign connections.
It goes on and says that on the morning of October 11th the district representative of the Ribbentrop Private Foreign Office, Dienststelle Ribbentrop, made an appointment by telephone with Mr. Lachman to arrive at appointed time. In answer to my question with whom I was dealing, and which official bureau, the representative informed me that he was not himself the district representative of Ribbentrop Private Foreign Office, but that Mr. Lachman for Bormann, who said that he himself had come at Mr. Bormann's orders. of foreign propaganda, and Ribbentrop's Foreign Office in order to create a private organization for foreign propaganda, for this purpose the support of our firm and above all ah index of addresses were needed. The next sentence in the third paragraph I would like to read. "I informed Mr. Lachman that our firm has put itself years ago at the disposal of official bureaus for purposes of foreign propaganda, and that we had supported all requests addressed to us to the utmost.
I now hold in my hand document number P-167. This also is a copy of document found in the files of the Krupp Company by representatives of America and the British Isle. It is dated 12th day October ------of the meeting at Essen on 12th day October, 1937. It indicates that only in the "Mazo" representing the intelligence with the combined service of the ministry is the department coming under the defense office, as for the intelligence in the foreign department, but not including matters published in newspapers.
Intelligence received by Koch was from agents, and threading through other channels to be passed on by the services of the Intelligence.
Finally, the third paragraph states: On our part we undertook to supply cases to combine the service of ministry as required. to discuss the conspirators program of self-sufficiency, proceeded, as I have said so many times here today, with an amazing -- a real amazing speed; the production of steel, for example, as shown in the official German publications, rose as follows:
The production of gasoline increased at an even greater tempo: from 387,000 tons in 1934 to 1,494,000 tons in 1938. program with a sense of urgency which clearly betrayed their awareness of the imminence of war. At a 4 September 1936 meeting, Goering pointed out that "all measures have to be taken just as if we were actually in the state of imminent danger of war." He pointed out that "if war should break out tomorrow we would be forced to take measures from which we might possibly still shy away at the present moment. They are therefore to be taken." The extreme urgency was manifested by Goering's remark that "existent reserves will have to be touched for the purpose of carrying us over this, difficulty until the goal ordered by the Fuhrer has been reached; in case of war they are not a reliable backing in any case." 21 August 1936 the defendant Schacht was continuing with Hitler who had ordered that all formations of air force be ready by April 1, 1937. This served to accentuate the urgent sense of immediacy that had provided the Nazi economy from the outside. Reading from other sections in Hitler Nazi -
THE PRESIDENT: I am going to interrupt you. Insofar as I under
MR. DODD: No, Your Honor, the figures there on the production of steel, and of oil are from the statistical year book of the German Reich, 1939 and 1940, and the statistical year book from the German Reich 1941 and 1942. That is, with respect to the steel figures, and the figures which I quoted with respect to the production of gasoline are from the statistical year book of the German Reich, 1941 and 1942. marked EC 416, in document book.